Report criticizing NC hospital systems released. Here’s what it said about Atrium, Novant

Charlotte’s major hospital systems, Atrium Health and Novant Health, were named in a report by state leaders Wednesday that criticized some N.C. hospitals for failing to provide sufficient care to the state’s poorest residents.

The report is the result of an analysis by the North Carolina State Health Plan, which insures teachers and state employees, and Johns Hopkins University Bloomberg School of Public Health researchers. It found that as of 2019, the state’s hospitals reaped higher profits than the average hospitals nationwide, but spend relatively little in comparison on care for low-income patients.

“It’s profits over patients,” state Treasurer Dale Folwell said. “And that’s not something that any of us should be in favor of.”

The report found that North Carolina hospitals raked in some $1.8 billion in federal, state and local tax breaks between 2019 and 2020. Most hospital systems — including Atrium and Novant — spent on charity care less than 60% of what they received in tax exemptions. What’s more, some N.C. facilities spent less than 0.5% of their total expenses on charity care.

The report is yet another attempt by state leaders to bring attention to the high costs of health care in North Carolina. State lawmakers introduced numerous bills this year aimed at protecting patients from high or unexpected costs. Folwell has also long fought hospitals in an attempt to lower health care prices for state workers.

“The state health plan is on an unsustainable course as far as health care costs going up at a much faster pace than the appropriations into the state health plan,” Folwell said. “What needs to happen is the cartelization of health care in North Carolina needs to stop, because the consumers are not being protected.”

Nonprofit hospitals can receive tax-exempt status if they provide charity care to low-income residents. The report found many hospitals in North Carolina provide less charity care than what they receive in tax breaks.

“If a hospital will make a lot of money, but then provide disproportionately low charity care, especially given that the hospital does have discretion, then that raises a red flag,” said Ge Bai, a Johns Hopkins professor of accounting and health policy and management.

Hospitals can also receive tax-exempt status due to bad debt incurred by patients who do not pay for services, or losses incurred by serving Medicare or Medicaid patients, or for funding community-building activities.

For example, Atrium Health reports its community benefit during 2019 was $1.65 billion and Novant reports a community benefit of $1 billion.

A spokesperson for the North Carolina Healthcare Association, which represents the state’s hospitals, did not immediately respond to a News & Observer request for comment Wednesday morning.

“Some nonprofit hospitals might not behave in accordance with their charitable mission,” Bai said. “Why should the taxpayers continue to subsidize these nonprofit hospitals?”

WakeMed, by contrast, spent more on charity care than what it is estimated to have received in tax breaks.

Here’s how Atrium and Novant facilities fared on the state report:

Atrium Health received about $440 million in tax exemptions in 2019-2020, according to the report, but spent $260 million on charity care.

Novant Health received about $324 million in estimated tax exemptions but spent $179 million on charity care, the report said.

The report further breaks down charity care by individual facility. For example, Atrium Health’s Mercy Hospitals had the second-highest profit margin of N.C. facilities studied in the report but only the 42nd-highest rate of charity care out of total expenses. And Novant Health’s Presbyterian Hospital Huntersville ranked third in profit margin and 22nd in charity care.

Still, four Atrium Health facilities (Atrium Health Kings Mountain, Carolinas Healthcare System Anson, Atrium Health University City and Atrium Health Lincoln) and one Novant Health facility (Thomasville Medical Center) ranked in the top ten for the highest percentage of charity care out of total expenses.

Atrium did not immediately respond to requests for comment and Novant referred questions to the North Carolina Healthcare Association.